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Issues:
1. Interpretation of section 129 of the Income-tax Act, 1961 regarding the continuation of proceedings after a change of incumbent. 2. Validity of assessment order based on directions given by Inspecting Assistant Commissioner under section 144B. 3. Compliance with principles of natural justice in assessment proceedings. 4. Authority of the Income-tax Officer to frame assessment based on directions received. 5. Jurisdiction of the Commissioner of Income-tax (Appeals) to set aside an assessment order. 6. Consideration of procedural irregularity versus nullity of assessment order. 7. Right of the assessee to challenge the assessment order based on non-compliance with directions. Analysis: 1. The judgment addresses the interpretation of section 129 of the Income-tax Act, which allows the succeeding income-tax authority to continue proceedings from the stage left by the predecessor, with the provision for the assessee to demand reopening or rehearing. This provision ensures fairness and adherence to natural justice principles during assessment proceedings. 2. The validity of the assessment order is questioned based on the directions given by the Inspecting Assistant Commissioner under section 144B. The Commissioner of Income-tax (Appeals) found several infirmities in the assessment, including inadequate opportunity for the appellant to be heard and arbitrary additions/disallowances. Consequently, the assessment order was set aside, and a fresh assessment was deemed necessary to rectify the procedural irregularities. 3. The judgment emphasizes the importance of compliance with principles of natural justice in assessment proceedings. The Inspecting Assistant Commissioner's directions were found to be flawed, leading to unjust additions and disallowances. This highlights the significance of providing adequate opportunity to the assessee and ensuring that assessment decisions are based on valid grounds. 4. The authority of the Income-tax Officer to frame the assessment based on the directions received is discussed. The Income-tax Officer is bound by the directions of the Inspecting Assistant Commissioner under section 144B(5), and any change of incumbent does not alter this obligation. The succeeding officer is required to follow the given directions without further assessment discretion. 5. The jurisdiction of the Commissioner of Income-tax (Appeals) to set aside an assessment order is upheld in the judgment. The Commissioner's decision to set aside the assessment due to procedural irregularities and lack of basis for additions/disallowances was deemed appropriate, indicating the authority to ensure fairness and legality in assessment procedures. 6. The judgment distinguishes between procedural irregularity and nullity of the assessment order. While the assessment was not considered void ab initio, it was recognized to suffer from procedural irregularities that required rectification through setting aside the order and conducting a fresh assessment in accordance with the law. 7. The judgment acknowledges the right of the assessee to challenge the assessment order based on non-compliance with directions. The failure to follow the directions given by the Commissioner of Income-tax (Appeals) provides grounds for the assessee to challenge the order separately if it deviates from the prescribed legal procedures and principles of natural justice.
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